Comprehensive Market Analysis and Company Insights

Broker Name: Lim & Tan Securities

Date of Report: 24 December 2024

Seatrium Limited

Seatrium Limited (\$1.93, up \$0.02) has announced a significant contract with BP Exploration and Production Inc (bp) for engineering, procurement, construction, and onshore commissioning (EPC) work on the Kaskida Floating Production Unit (FPU) project in the US Gulf of Mexico. The Kaskida project is a greenfield development located approximately 250 miles southwest of New Orleans in the Keathley Canyon area of the Gulf of Mexico. The project involves a single topside module supported by a four-column semi-submersible hull and is situated in water depths of approximately 6,000 feet.

The Kaskida FPU boasts a production capacity of 80,000 barrels of crude oil per day from six wells in its first phase. Seatrium plans to integrate and lift the topsides using its cutting-edge Goliath twin cranes with a combined lifting capacity of 30,000 tonnes. This approach enhances safety and efficiency by assembling topsides at ground level. William Gu, Executive Vice President, Energy (International) of Seatrium, expressed gratitude toward BP for entrusting them with this milestone project and highlighted their commitment to completing it safely and on time.

Despite strong order win momentum and ongoing share buybacks, Seatrium is trading at 40x forward PE and 1x PB, with no dividends. However, uncertainties remain due to the ongoing corruption probe related to “Operation Car Wash.” Lim & Tan Securities recommends a “HOLD” on Seatrium, citing fair valuations.

Keppel Ltd

Keppel Ltd (\$6.73, up \$0.03) continues to shine as a global leader in sustainability. The company has been included in the Dow Jones Sustainability World Index (DJSI World) and the Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific) for the third consecutive year. Keppel ranked in the 99th percentile among industry peers in the Corporate Sustainability Assessment by S&P Global. Additionally, it has retained its AAA rating in the 2024 MSCI ESG ratings, reaffirming its commitment to sustainability and decarbonization efforts.

Keppel’s inclusion in other indices such as the FTSE4Good Index, iEdge Singapore Low Carbon Indices, and Euronext Vigeo World 120 further underscores its commitment to sustainable development. The company operates in over 20 countries, providing solutions in infrastructure, renewables, clean energy, and urban renewal.

Keppel’s market cap stands at S\$12.2 billion, trading at 14.4x forward PE and 1.2x PB, with a dividend yield of 5.1%. The company’s re-acceleration of asset monetization plans and alignment with global net-zero initiatives are expected to drive growth. Analysts maintain an “Accumulate” recommendation, with a one-year target price of \$8.10, representing a potential 20% upside.

Institutional and Retail Fund Flow Insights

Institutional investors recorded a net sell of S\$47.9 million for the week of 9 December 2024, while retail investors posted a net buy of S\$80.1 million. Key institutional net buys included OCBC (S\$82.9 million), UOB (S\$33.6 million), and Keppel (S\$23.0 million). On the flip side, major net sells were seen in DBS (S\$64.0 million), Singtel (S\$39.3 million), and CapitaLand Investment (S\$19.5 million).

For retail investors, DBS led net buys with S\$52.9 million, followed by SATS (S\$24.7 million) and CapitaLand Investment (S\$22.1 million). However, significant net sells were recorded for Yangzijiang Shipbuilding (S\$66.9 million), OCBC (S\$44.3 million), and Singtel (S\$39.3 million).

Sector-Specific Trends

Institutional investors showed mixed sentiments across sectors. Financial services and technology hardware/software recorded net buys, while REITs and industrials experienced significant net selling. Retail investors showed interest in REITs, technology, and financial services while reducing exposure to telcos and utilities.

Dividend Announcements

Several companies announced upcoming dividends:

• FNN: 4 cents final dividend (Ex-Dividend Date: 23 Jan, Payable: 28 Jan)
• Frasers Property Ltd: 4.5 cents final dividend (Ex-Dividend Date: 23 Jan, Payable: 14 Feb)
• PNE Industries Ltd: 2 cents final dividend (Ex-Dividend Date: 27 Jan, Payable: 14 Feb)
• Thai Beverage: THB 47 cents final dividend (Ex-Dividend Date: 6 Feb, Payable: 28 Feb)
• LHN Ltd: 1 cent final and 1 cent special dividend (Ex-Dividend Dates: 6 Feb & 9 Apr, Payable Dates: 21 Feb & 30 May)

Macro Market News

Global markets remain cautious as geopolitical risks and economic uncertainties persist. Key highlights include:

• US consumer and business confidence improved post-election, but global sentiment remains sluggish.
• China’s housing market shows signs of stabilization due to government stimulus measures, though more support is needed to reaccelerate growth.
• Geopolitical risks are expected to shift from Ukraine-Russia to escalating tensions between Israel and Iran in 2025.

SGX Watch-List Updates

The SGX watch-list includes 33 companies as of the latest update. Recent additions since the second half of 2023 include Addvalue Technologies, Renaissance United, and Telechoice. These companies face challenges that have placed them under scrutiny, highlighting the need for improved financial performance and compliance.

Conclusion

The report by Lim & Tan Securities provides a detailed analysis of key companies and macroeconomic trends, offering valuable insights for investors. Seatrium Limited and Keppel Ltd emerge as noteworthy stocks, with Seatrium’s promising project pipeline and Keppel’s strong focus on sustainability positioning them for future growth. However, cautious optimism is advised given ongoing geopolitical and economic uncertainties.